gwen: another week of distractions, on the presidential campaign on capitol hill and on wall street. we explore it all tonight on "washington week." the candidates race to define each other. >> the center piece of his campaign is quick clearly is character assassination and the center piece of my campaign is my vision to get america working again. >> he's running for president and if he's going to run the country the way he ran our business, i wouldn't want him in there. gwen: but much of it is overshadowed by a billionaire's plan to throw a new spotlight on an old debate. house speaker john boehner renews another hard-fought battle, this time over the debt's ceiling. >> where's the president's plan to stop the largest tax increase in american history from occurring on january the

1st? gwen: and government asks the question what is big bank's role when the nation stumbles? >> a nation that's just gone through the crisis we've gone through to understand what is legitimate, what isn't legitimate. >> i would suggest that j.p. morgan take their business to las vegas because it's a gamb. gwen: covering the week, karen tumulty of "the washington post." jeff zeleny of the "new york times." david wessel of "the wall street journal," and john harwood from cnbc. >> live from our nation's capital, this is "washington week with gwen ifill," produced in association with corporate journal and provided by -- >> since 1875 we've been there

for our clients through good times and bad. when we need change, we were there to meet them. from real estate to retirement solutions, we've developed new ideas for the financial challenges ahead this rock has never stood still. and that's one thing that will never change. prudential. >> we know why we're here. to connect our forces to what they need, when they need it. >> to help troops see danger before it sees them. >> to answer the call of the brave and bring them safely home. >> around the globe, the people of boeing are working together to support and protect all who serve. that's why we're here. >> corporate funding is also provided by norfolk southern,

at&t, rethink possible, additional funding is provided by the annenburg foundation, the corporation for public broadcasting and by contributions to pbs stations from viewers like you, thank you. once again, live from washington moderator gwen ifill. gwen: good evening. one of the best things about accepting the news at week's end is we get to see what went according to plan and what didn't. the president wanted to make the case that his re-election has sustained the recovering economy. >> one of the ways that we can sustain momentum is for congress to take some actions right now even though it's election season, even though there's gridlock, even though there's partisanship. >> mitt romney wanted to say the exact opposite. but -- >> people are shuttering because of the policies in this

administration. he has try toddy vide the american people and tried to talk about this group and the 99%. we're all americans and we're a united people. our strength as a nation has come to the fact that we've come together, we work together . gwen: this time the distraction came in the part of a billionaire brokerage founder bill rickets. what was he trying to do, jeff? >> joe, rickett is the latest example ol a wealthy contributor of playing by the new rules where unregulated money reigned supreme. he was trying to have an influence. he sought out top republican strategist who were more than eager to throw some business his way. he said he would spend $10 million and he asked people to come up with a plan that would sort offer makeen impact. one of these plans that were reviewed in a secret meeting in

chicago was to resbrunes reverend jeremiah wright back into this campaign. he's a familiar figure in 2008 but it was mainly from the primary of 2008. he rejected using him in the general election. so this plan was designed to reintroduce him. it was not signed off by mr. rickets and his family. but one of the problems here as this was being revealed and coming to a light, the blowback was furious and swift. he is the founder of t.d. america trade. his family owns the chicago cubs. so a lot of consumer reaction, if you will to this, at the idea of using this type of divisive campaign. gwen: how do you know this is a real plan and wasn't somebody freelancing and trying to revive the right controversy without any knowledge of the candidate? >> it was a real plan at least underway and he had yet to sign off on it.

but the real plan, the fact that it was in the works was proven by the fact that he had seen this first advertisement of jeremiah wright, an advertising man wanted to use four years ago. he said that should be used this time. the plan that we obtained is a 54-page document. it was bound. there are color pictures. it had all the story boards about how this would unfurl. and it was set to be launched in the national convention. he had not signed off of it. but some members of his family were supportive of it. and he had given some sense of approval that he thought it was a good idea. gwen: i just want to ask karen, we have heard throughout the campaign of previously unheard of millionaires and billionaires who have tried to shape the direction of this campaign, kept rick santorum's campaign alive. and now we have joe rickett who is is doing something which

obviously the romney campaign has repudiated. has this been a citizen's united impact? >> it is. and we have seen this week most dramatically that this is a real to use the cliche double-edged sword for the campaigns. because on the one hand these are untold amounts of resources that can be thrown into the campaign. but the candidates don't get to control the message. so even as mitt romney keeps trying to talk about the economy which by the way is the issue that remains on the top of all the voters' concerns that day he was planning to talk about a big speech in florida and what did he talk about is an attack that never happened who was planned by people were not associated with his campaign. these outside sources are really sort of taking away from the candidates, the ability to

control their own destiny in many ways. >> what's the difference though about the role of those outside forces in this campaign and what we saw say eight years ago when veterans for truth went after john kerry and independent of the bush campaign. >> people forget they did not actually spend a lot of money. it was quite frankly those of us who are in the normal, regular traditional media who kind of picked that up and gave them the intention they needed. but what you have here are people who are going to be able to pour tens of millions of dollars on to the air waves themselves. >> couldn't they do that before? didn't citizen's united open the door for corporations to do that where individuals could do that already? >> you never heard of the phrase "super pac" before this year. and it was after citizens united that these kinds of structures were set up, sort of

a vehicle for that money so that, you know, the people can say give it to cross roads which is a group run by karl rove and he can take all that money and pool it and sort of drive the message. >> so let's step back from this particular spat. it seems like it's a very close race at the moment. is that the right reading? >> i think it is a close race at this point and in large amount the economy is the underlying issue. if you look state by state by state, mitt romney's actually doing fairly well in a lot of these early battleground states. he is holding his own in florida. he is holding his own in ohio. he's down in a little bit in a couple and he's up in a couple. this is a very close race and it's one of the reasons the white house is trying to work overtime to try to define romney. they believe between now and august is a critical time to define mitt romney.

>> and mitt romney's approval rating has risen by 9 percentage points according to gallon lup in the primary. >> -- gallop in the primary. gwen: last week we were talking about gay marriage. this week we're talking about jeremiah wright and they seem to bubble up and then they fade. but either -- neither campaign could ignore it because you don't know what is the tipping point. >> mitt romney was eager to denunsyate this effort an they wanted to send the message to all republican wealthy contributors that we want this message to be on the economy. now, at the same time, i mean, there are some people in the republican world who are fine with the fact that jeremiah wright storyline because it reminds people wait didn't we have some questions about the character of this president. gwen: any of those people who

have been affected by it, haven't they voted for barack obama anyway? >> probably not. this has been nonstop. >> does that mean all the talk that we heard at the end of the primary campaign about how romney had been dragged to the right and damaged, was that a momentary phenomenon and we're in a neck and neck race? >> i think what we're into is this race has gone back to what it was all goings to be. mitt romney has a less favorable public image at this point, i think, than any other recent republican nominee in recent history. but at the same time we have seen that recovering quite a bit since the end of the primary and we are having to watch him getting pounded on by the right and getting pounded on by his opponents. >> so are you saying that i want to know what's going to happen just watch the unemployment sflate i mean, the

unemployment rate is falling particularly in ohio, virginia, florida's down a lot? we have to watch how people feel about their personal circumstances and their personal conditions. a large share of people feel the country is on the wrong track. key battleground states that have low unemployment but people there don't necessarily belief that their circumstances are any much better than ohio. unemployment rate is important but it's not the only indicator that's going to drive this presidential race. gwen: it seems to me that everyone's talking to their bases or everyone's trying to get their bases energized. but it seems like it's almost a wash. is there any possibility by bringing up the reverend wright thing -- we saw that the obama campaign came without a web ad trying to exploit the fact that the republicans were -- >> and they were raising money oint. gwen: so they think there's something good in bringing this

up. and the republicans are happy to remind people that barack obama is more left than he presents himself. >> and in the middle of this all are the voters who matter, the independent voters who are growing frustrated -- either a not paying attention yet or b frustrated. that's really what's going on. that's what the fight is for. that's what the romney campaign is worried for some association with reverend wright. gwen: is it possible for both sides to be so energized that ends up making the difference? >> well, there is a question of, you know, how big is the center anymore because we -- we are -- >> too big. >> but -- all the evidence does just that at this point into the race, the republicans base is much more energized.

gwen: ok. thank you both. i hope you all have been sitting at home wondering what ever happened to that scintillating debt ceiling debate? and can't we please talk about it again? well, we're here for you house speaker john boehner's got your back. >> it is a line in the sand because washington has kicked the can down the road, kicked the can down the road, kicked the can down the road and the american people think we're crazy. they're ready for washington to take action. i'm here. i'm ready to do it. gwen: taking action of but now? >> kicking the can down the road. it doesn't get much better. >> the reason now is that the republicans have decided that the president is vulnerable on the debt for good reason. he said he needed to do it in order to take care of the recession. i think nobody expects anything to happen before the election on the debt ceiling and on this

so-called fiscal clip, the tax increases and spending cuts that are going to be triggered december 31st unless the president find some way to reduce the president. so people are staking out their position. on tuesday this week there was a conference on the deficit called by pete peterson the billion fair, deficit fighter and tim geithner -- i interviewed tim geithner said i don't need to do the debt ceiling into early 2013. they would like to separate it from tax increases and spending cuts. but john boehner does not want to do that. he knows that's wouven the few levers that they have against the president. he says we're not doing the debt ceiling unless we're doing spending cuts an reform as big as the increase. gwen: now president meet with some congressional leaders over hogeie this is week. both sides came up with completely different

interpretation of how it happen. >> surprise, surprise. it's clear that the president made this clear to be boehner. we should just do the debt ceiling and separate it from everybody else. and he said that that quote took his breath away. it's more of the post erring. gwen: were the hoagie's any good, that's the question. >> they were pushing the government to the edge of default. the markets weren't really wild about this. i mean, how -- how does wall street -- are they finally deciding that these guys are just bluffing? is this going to cause some real problems? >> that's a great question. what we know so far wall street is completely preoccupied. either they were watching facebook that went down to 38.33 which is a little bit

above the initial price or they were looking at europe which has far bigger problems than john boehner and barack obama. so the stock market was down overseas but the rate at which the treasury borrows money fell to the lowest rate ever this week. the government borrowed at 1.7%. i think the people know that the markets are going to be worried about that but for the moment they're not. >> david, i noted the language from jay carnie talking out this and i agree with you this is all posturing and nothing's going to happen. jay carnie made a point when briefing that the president will not allow the same thing will happen on the debt creating -- ceiling that happened in 2011. i wonder that's a consideration of using his executive authority. is there any reason to think that might happen? >> i don't have any reason to think that. i think for one thing that tim geithner made clear because revenues have been a little

more than expected, they have more wiggle room that they can push it into february 2013. the tax cuts would have to be dealt with before that. if the republicans want to do the same thing they did in august of last year, i don't see how the president stops him. >> in spite of all the gridlock, i noticed one thing did happen in the senate this week. they confirmed a couple of people. why did that go through? it seems the only sunshine -- >> you're right. the president nominated a republican and a democrat for two seats in the federal reserve. there apparently was enough said that the fed needed two people that they got the 60 votes they needed. of course these two candidates through the confirmation process. it means since 2006 that the fed has had seven governors.

will it make any difference in policy? i think ben bernanke has two reliable votes. it doesn't look like he wants to do anything now anyway. >> it's remarkable as to the exception to the rule the idea this this is a big deal -- >> and they were totally uncontroversial. gwen: which never happens anymore. ok. well, wall street was shaken by the bigger of that facebook i.p.o. and by the shock of two to three and now they're saying $5 million blunder, and washington asks is there anything congress or the white house could have done to stop it? democrats say there should be tougher regulations. the republicans say not so fast. which was the prevailing view by the owned the week? john? >> i don't think there's a lot that congress can do. we'll see. there are going to be some hearings. gwen: hearings -- ooh. >> series of them. but certainly members of congress whose approval ratings

are so far down in the toilet, they welcomed the news-making by an institution that's right down with them. j.p. morgan, in one of the most unfortunate bits of timing that i've seen for a lobbying campaign because jamie diamond has been leading the charge to weakened the so-called vocal rule which is a key part of the financial regulation bill in sing that we know what we're doing, the regulators can't restrict our activity and as barney franks said the other day, that argument for at least $2 billion hard tore make. of course, now it may be $5 million. >> with the vocal rule, would that have prevented this from happening? >> we don't know. the administration hasn't determined that and the feds have said they don't have information information to determine. that karl levin asserted that it would have. this was at least as the legislation was intended -- of course there's no regulation.

>> explain what the vocal rule is. >> it was designed to prevent banks which benefit from taxpayer guarantee from gambling their own money. now, there were some permissible bets they could make, so-called hedges against specific investments that the bank had made. but the intent of this rule was that they couldn't hedge against their entire portfolio of assets because that was too big of a gamble to make. carl levin asserts that that was what was done here. the vocal rule isn't going to be done by a team of regulators by july. so it's hard to say. >> the game is now with the regulators. does this change the regulation? does this mean that the regulation will be tougher? >> i don't see how it will affect that process. everyone is conscious of what happened. even bob corker said we need to find out what happened and make sure independent doesn't happen

again. even though j.p. morgan is a profitable institution, they can take a $5 million hit. but what does that tell you about banks that are less nationally resilient. are they going to leave taxpayers on the hook? that's a principal goal in the financial world. >> what's the effect on the presidential campaign where you have president obama who's often citing the bad behavior of wall street. then you have mitt romney who is a businessman. what is the effect of the argument? >> i think it's definitely going to help the argument of the democrats. the president has been making the case that dodd frank is nose prevent taxpayers from being put in position from bailing out banks again. headlines that say a major financial institution or wall street just lost billions in a bad bet can't help but reinforce that argument. mitt romney has been

campaigning for some time saying i'm going to repeal dodd-frank. this shows that my call for common sense regulation is legitimate. now, of course, he considers common sense regulation something different than dodd-frank but he's still call calling it. gwen: is bluffing illegal? >> no, you can't take the risk out of business investments but if you've got tax pay kwlorse are on the hook for -- gwen: which is not the case here -- >> well, no, they're not. but the point is is this an indication of a deeper problem in the system with banks that are more down than j.p. morgan. >> doesn't it strengthen the case that the most important thing is force the bank to have so much capital that when you make mistakes they can -- >> absolutely, yes. you know, there are some bankers who have said yes, we need to have more capital. but certainly that argument is easier to make right now. >> we have jamie diamond who

has spent a lot of time in washington did not have a good week, we can all agree. >>er did -- he did not. there was a time where people called him barack obama's favorite banker. gwen: that's all the time we have. but the conversation contributes on our web cast. be sure to join us next week when michael duffy will join me for my monthly chat. we'll talkability -- talk about presidents past and present. in the meantime keep up with daily developments with me on the pbs news hour and we'll see you again next week on "washington week." good night. >> congratulations gwen ifill, this year's recipient of the pbs bee moore award for couraging television viewers to expand their horizons and explore new ideas.

funding for "washington week" is provided by -- >> a line is a powerful thing. it connects the global economy to your living room, cleaner air, to stronger markets, factory floors, to less crowded roads. today's progress to tomorrow's promise. nor fork southern, one line, infinite possibilities. >> this is the at&t networks, bringing new ideas to life.

in here, the right minds from inside and outside the campaign come together to work on an idea adding it from the road, from the cloud to a new idea. it's the at&t network providing new ideas to work together so business works better. >> corporate funding is also provided by -- boeing, prudential financial, additional funding is provided by the anenburg foundation, the corporation for public broadcasting and by contributions to your pbs n stioatfrom viewers like you. thank you.